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The GOP and the Next Recession

So here’s an angle to policy that I’m not hearing discussed much. Pretty much everything Republicans are pushing as far as domestic policy will make the next recession a lot worse. How? While there are a lot of moving parts, the basic principle is simple. When the economy goes bad, a lot of people lose their jobs. What happens next either makes even more people lose their jobs, or not. If the jobless have access to unemployment and medicaid, then they keep spending. And that continued spending (using money from government benefits) keeps other people from also losing their jobs. In short, programs like unemployment are systemic buffers to the economy as a whole, keeping a bump from becoming a crash.

Now the problem is that these buffers are being systematically dismantled. Why, because they are not seen as a failsafes for the economy as a whole, but instead as handouts to the unworthy. And so they are being squeezed to death. The average payout, the length of benefits, etc. are all shrinking under state-by-state legislative assault. And the worst idea (from the point of view of systemic resiliency) would be a change unemployment from an elastic benefit that is available to all who qualify, to block grants. A block grant is a fixed sum of money given to each state for use funding benefits. When the money is used up, no one gets the benefit any more. Republicans love it because it puts fixed caps on spending. But in a crisis it will make the next recession much worse. And the next recession will come. It is only a question of when.

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